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GuruFocus has detected 2 Warning Signs with VF Corp $VFC.
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VF Corp (NYSE:VFC)
Beneish M-Score
-2.78 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

VF Corp has a M-score of -2.78 suggests that the company is not a manipulator.

VFC' s Beneish M-Score Range Over the Past 10 Years
Min: -4.36   Max: -1.13
Current: -2.78

-4.36
-1.13

During the past 13 years, the highest Beneish M-Score of VF Corp was -1.13. The lowest was -4.36. And the median was -2.57.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of VF Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 0.9759+0.528 * 0.9845+0.404 * 0.9252+0.892 * 0.9932+0.115 * 0.928
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.062+4.679 * -0.0423-0.327 * 1.0516
=-2.78

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $1,253 Mil.
Revenue was 2581.677 + 3320.574 + 3488.226 + 2445.259 = $11,836 Mil.
Gross Profit was 1294.992 + 1630.169 + 1687.478 + 1176.486 = $5,789 Mil.
Total Current Assets was $4,092 Mil.
Total Assets was $9,246 Mil.
Property, Plant and Equipment(Net PPE) was $914 Mil.
Depreciation, Depletion and Amortization(DDA) was $280 Mil.
Selling, General & Admin. Expense(SGA) was $4,251 Mil.
Total Current Liabilities was $1,836 Mil.
Long-Term Debt was $2,051 Mil.
Net Income was 209.163 + 264.333 + 498.489 + 51.015 = $1,023 Mil.
Non Operating Income was -0.067 + 0.305 + -1.097 + 1.501 = $1 Mil.
Cash Flow from Operations was -210.162 + 1434.551 + 31.594 + 157.342 = $1,413 Mil.
Accounts Receivable was $1,293 Mil.
Revenue was 2634.417 + 3326.279 + 3529.626 + 2426.986 = $11,917 Mil.
Gross Profit was 1283.717 + 1603.911 + 1685.185 + 1166.048 = $5,739 Mil.
Total Current Assets was $3,973 Mil.
Total Assets was $9,832 Mil.
Property, Plant and Equipment(Net PPE) was $986 Mil.
Depreciation, Depletion and Amortization(DDA) was $274 Mil.
Selling, General & Admin. Expense(SGA) was $4,030 Mil.
Total Current Liabilities was $2,529 Mil.
Long-Term Debt was $1,401 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1253.423 / 11835.736) / (1293.275 / 11917.308)
=0.10590157 / 0.10852073
=0.9759

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(5738.861 / 11917.308) / (5789.125 / 11835.736)
=0.48155682 / 0.48912252
=0.9845

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (4092.15 + 914.244) / 9246.278) / (1 - (3972.874 + 986.162) / 9832.263)
=0.45855035 / 0.49563636
=0.9252

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=11835.736 / 11917.308
=0.9932

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(274.225 / (274.225 + 986.162)) / (279.985 / (279.985 + 914.244))
=0.21757206 / 0.23444833
=0.928

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(4251.034 / 11835.736) / (4030.486 / 11917.308)
=0.35916938 / 0.3382044
=1.062

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((2051.482 + 1835.859) / 9246.278) / ((1401.233 + 2529.467) / 9832.263)
=0.42042225 / 0.39977572
=1.0516

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(1023 - 0.642 - 1413.325) / 9246.278
=-0.0423

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

VF Corp has a M-score of -2.78 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

VF Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.03260.82820.96510.93371.180.94870.9940.9021.00430.9267
GMI 0.9990.98940.99320.94751.02010.9840.96810.98981.00780.9945
AQI 1.16380.99831.0220.94081.23350.9610.9590.92810.94990.9844
SGI 1.16151.05860.94471.06681.22811.15021.04961.04051.01270.9989
DEPI 1.00230.86680.94560.97261.05220.95111.04520.94551.01070.9692
SGAI 0.99881.05151.0221.0330.97591.01341.01750.99350.9971.0598
LVGI 1.1710.94680.93871.0081.18580.87380.88461.05931.12781.1322
TATA -0.036-0.0113-0.0794-0.0673-0.02-0.0245-0.0283-0.0720.0028-0.0417
M-score -2.46-2.65-2.92-2.86-2.15-2.50-2.57-2.93-2.51-2.81

VF Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.9020.95050.97661.06190.99711.00960.99810.96070.94360.9759
GMI 0.98980.99820.99931.00721.00661.00631.00450.9970.99240.9845
AQI 0.92810.89550.9110.89830.94990.99970.98051.00710.98440.9252
SGI 1.04051.03021.01640.99821.02010.99820.99770.99350.98090.9932
DEPI 0.94550.94260.98021.03411.01071.07051.00130.95640.96920.928
SGAI 0.99350.99040.98790.98051.00031.01131.01531.02721.06181.062
LVGI 1.05931.2921.22111.15411.12781.04121.06571.10011.13221.0516
TATA -0.072-0.0319-0.0242-0.00680.0028-0.0262-0.04-0.039-0.0417-0.0423
M-score -2.93-2.79-2.71-2.54-2.51-2.60-2.70-2.75-2.81-2.78
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